Building a Business Case for the CIO's Digital Initiatives
By Jason Mowery, Director, Digital & Mobile Solutions, KPMG Advisory
Digital technology is everywhere today. The impact of social media, online applications, multimedia, cloud computing, interoperable systems, and mobile devices is beyond dispute. For many CIOs and IT professionals supporting digital initiatives, the “what” of digital is not the challenge. It’s the “how” as in how to articulate business value to justify strategic digital initiatives.
"CIOs are now responsible for a wider and more complex range of technology enablement projects for customers"
To better understand this challenge, we need to step back and look at the impact of the digital wave on the IT organization. Even a few years ago, digital was perceived as something primarily focused on mobile apps and developing content to be delivered by mobile devices. It was driven by a response to customers’ expectations for technology and brand interaction. Traditional areas of IT that were making technology decisions focused on operational efficiencies, cost savings and “keeping the lights on” were suddenly being led by outward-facing business functions such as sales and marketing. The digital solution demand exposed gaps in core IT skills that were primarily focused on Tier-1 support rather than customer-centric mobile app development.
Today, the gaps are closing as digital becomes business as usual, thereby changing the IT leader’s role in important ways. CIOs are now responsible for a wider and more complex range of technology enablement projects for customers and, increasingly, for employees. At the same time, digital projects require a larger number of approvals─many of them outside the IT function─and often give rise to new processes for approvals and budgeting that are not structured around established IT priorities and investment strategies.
While CIOs understand and can articulate how digital initiatives add value, much of the IT organization, which traditionally advances through their careers based on their technical expertise─find that digital projects require new skills and a new way of thinking of themselves as “Business Owners.”
Five points to consider
As an IT business owner, you can lead a growing range of digital technology projects, whether it’s implementing new platforms, deploying mobile solutions or updating existing systems using human-centric design. In all cases, you still need to tie digital to business value in order to justify spending. Here are five points that need to be considered:
1) Revenue growth and improved margins: This is perhaps the strongest argument for digital. A good example of how to build a business case that can help sell your initiative internally is e-commerce. Properly developed and supported, digital commerce can help move IT from a spend organization to a revenue-generating organization with its own P & L. Digital commerce can also create a multiplier effect for any investment supporting digital projects and platforms. Compared to traditional channels and physical stores, digital can help companies to scale much faster and expand their footprint into new products, services, markets and geographies. Digital can also lower the costs of servicing customers while growing sales in existing accounts, increasing sales in new accounts, and improving customer retention rates. Digital commerce can happen anytime from anywhere and facilitate faster payments, thereby accelerating the order-to-cash cycle.
2) Speed-to-market: A properly designed and implemented digital initiative can significantly improve speed to market. Innovative goods and services can be introduced without the time and effort required to expandinfrastructure. The time and effort needed to secure upfront CAPEX (capital expenditure) funding can also be reduced.
3) Operational excellence: Digital cuts across many layers, processes, and functions such as technology, data and analytics, organizational structure, supply chain and customer care. Brands can get an end-to-end view of a customer and employee interaction, enabling them to monitor every step of the process. This identifies the friction points, helps resolve issues more quickly based on a holistic view of the interaction, facilitates straight-through processing, and illuminates the value proposition for optimizing operations.
4) Customer intimacy: Studying customer behavior to get an understanding of what they care about is a clear benefit with digital technology. Companies can observe and measure customer behavior more closely through the quantitative data. Customer feedback and buying patterns can be analyzed to help identify concerns, anticipate future needs, identify up-sell and cross-sell opportunities, and guide strategic planning. Digital can also improve the customer experience by reducing human error in order taking and processing, providing support, and giving customers ready access to a wealth of product information and competitive reviews online.
5) Industry trends: This involves analyzing digital technology trends and understanding investments and outcomes across your industry. It can also provide you with a basis to assess the ROI for an initiative, including revenue forecasts and long-term growth rates. It’s also important to understand where the industry trends are not going, is there a way to be different, even learn something from a different industry.
Most people agree that having a digital strategy can support sustainable growth and is now a normal part of a company’s technology solutions portfolio. Eventually, we’ll reach a place where doing business via mobile apps will be as routine as getting your company email address the first day on a new job. While the acknowledgement for digital solutions is high, the ability to articulate business value remains elusive and can be the difference between simply business as usual and being seen as a strategic business partner in the organization.